In this interview recorded at the Opal Family Office conference, Carol Pepper, founder of Pepper International, outlines her practical framework for single‑family office asset allocation and governance. She introduces the C‑B‑A model—Cash (C), Beta (B, public markets), and Alpha (A, alternatives)—and explains how the mix is driven by the portfolio’s function, such as multigenerational trusts versus income‑focused buckets. Pepper describes her fractional external CIO service, highlighting why families under $5 billion often prefer a part‑time, conflict‑free advisor over a full‑time, costly CIO. She details how family offices allocate across public and private markets, emphasizing the importance of family‑to‑family direct co‑investments that create long‑term partnerships and avoid fee‑laden GP‑LP structures. Deal sourcing is a two‑way street: private banks pitch on‑platform opportunities, but many of the most compelling deals arise from peer families sharing expertise (e.g., robotics, real estate, deep‑tech). Finally, Pepper shares her view on the current macro environment—election cycles, higher rates, Fed policy—and identifies hot opportunity themes: Bitcoin and gold as hard‑asset hedges, artificial intelligence applications, climate‑tech and carbon‑credit markets (e.g., Europe’s CBAM), as well as fintech and precious‑stone assets. The conversation blends strategic guidance with real‑world examples for ultra‑wealthy families navigating today’s uncertainty.
Chapters
Family offices generally have the full stack of asset allocation, although in my opinion, there's only one family office allocation, and it has three components: C, B, and A. So C is cash. I tell families to always have at least 2 or 3 years of cash in the bank so they don't have to worry about the market fluctuations. B is beta. Anything involved in the public markets is beta. It is very hard to significantly beat the market. You shouldn't even be trying to do that. No institutional top-caliber managers are doing that. A is alpha, and alpha comes with the alternatives. That could be real That could be direct private investments. That could be certain funds that are looking at alternative strategies. What combination of C, B, and A you use in a particular portfolio has to do with the function of that portfolio.
Welcome to Billionaire Brain Trust, our newest YouTube series that will take you behind the scenes into candid conversations with billionaires and those who work with them. Hosted by Steve Woodruff, who brings a unique perspective as a family office advisor. Billionaire Brain Trust will feature exclusive interviews with billionaires and the key players in their organizations, offering viewers a rare glimpse into their stories, decision-making frameworks, and what they are excited about right now. Whether you're an aspiring entrepreneur, a seasoned investor, or simply curious about the world of the ultra-wealthy, Billionaire Brain Trust will help you think bigger and achieve more.
I'm with Carol Pepper. Uh, we are in Newport, Rhode Island at the Opal Family Office, um, convention, and Really excited to be talking with you. Carol is an absolute powerhouse in the single-family office industry, and she founded Pepper International, an award-winning single-family office consulting group. And so I just really appreciate the time. Great, great to be talking with you. I know you guys help with founding, helping wealthy families found the family office, create the office, create the structure, also act as an external CIO to families.
Yeah.
So I appreciate it. Thanks for being with us.
Thank you. It's great to be here. You know, this is a wonderful conference here in Newport. Opal does a great job every year and we convene a whole bunch of single-family offices and allocators and interesting products. And it's a great time where people build a lot of relationships. This conference has been going on for at least 20 years. I think I've been here almost the entire time. So it's a fantastic Gathering.
You know everyone. When we walk down the hallway, everyone's grabbing you, grabbing you, trying to get your attention and talking to you. So it's, it's great to see.
Thanks.
Tell us more about the external CIO role. Why is a wealthy single family going to be hiring an external CIO as opposed to creating or finding their own internal CIO that only works with them? What's maybe the advantage?
Sure. Well, I created Pepper International in 2001, and for 23 years I've been actually setting up the family offices and acting as an external CIO. So if you're under $5 billion in assets, a lot of times, frankly, you don't really need a full-time CIO. You often have multiple managers and you definitely need somebody who's only on the side of the family, taking their side, is not compensated by kickbacks or anything from the manager. So it's important to have that independent role that's free of conflicts of interest. But oftentimes, you know, a full-time, full-blown CIO of the caliber that you would like to have might cost you millions of dollars a year. And it's just too big of a budget item for what you really require. So I created a business where I'm sort of a fractional CIO for several single-family offices. I never do more than a few at a time, but that way they get that high-caliber CIO, but they only pay for the amount of time that they require.
Okay, makes sense.
Mm-hmm.
Do you, do you help them allocate into public markets and then also private alternatives?
Yeah, family offices generally have the full stack of asset allocation, although in my opinion, there's only one family office allocation and it has three components: C, B, and A. So C is cash. I tell families to always have at least 2 or 3 years of cash in the bank so they don't have to worry about the market fluctuations. That's very important. Take some chips off the table and put them on the side. B is beta. Anything involved in the public markets is beta. It is very hard to significantly beat the market. Sure. You shouldn't even be trying to do that. No institutional Top caliber managers are doing that. So, yeah, cash and then beta and then A is alpha. And alpha comes with the alternatives. Great. That could be real estate, that could be direct private investments, that could be certain funds that are looking at alternative strategies. Yeah. So what combination of C, B, and A you use in a particular portfolio has to do with the function of that portfolio. Is this a multigenerational trust for your kids so you can afford to invest for 30 or 40 years? And some families even are making now 100-year portfolios.
Sure.
Where they have a 100-year time horizon, or is this, you know, a bucket that you have to access for family income expenses? So the asset allocation is really driven by the function of the portfolio.
Yeah.
And then you weight those 3 components depending on what's required.
Great. Yeah, really helpful. So let's talk about that A, the alpha section and the alternatives. Are— you mentioned real estate, private equity, I assume. Are you finding the deals entirely and bringing them to the families? Are they bringing ideas to you, I assume?
Yeah, I mean, it's really— it goes both directions. So I would say obviously all the family offices generally have 3 to 5 or even 10 private banks who are always pitching what we call on-platform deals. But a lot of the really interesting deals are happening family to family. So they're co-investing as equals. There may not be a GPLP strategy, so nobody's paying fees to anybody. Everybody's putting in their money and working together. And oftentimes you'll see say, one family that is expert in robotics and another family that has a lot of cash and doesn't know anything about robotics getting together because they share a lot of the same family values and they actually want to, you know, have their kids work together on projects in the future. We have families, for example, where one family is from Mexico, another family is from Sweden, and they come together and they do work together.
Yeah, that's cool.
So that's really exciting because it's often we're trying to form relationships not just for this particular deal, but literally for deals that are going to go on for multiple generations between the two families. So it's often a very long-term partnership.
Yeah.
And who kind of leads the deal depends on who has the expertise. So if you have a ton of expertise in real estate and I have a ton of expertise in deep tech, we may find ways to come together and build something entirely new. I was just talking to a gentleman here who's building certain kind of space launching platforms, literal physical platforms, and that's going to be put in Cape— near Cape Canaveral. So you just never know. I mean, But I think that there's a real hunger to find other families and do direct deals with them.
Yeah, that's cool.
Mm-hmm.
Yeah, that's excellent. Thanks for sharing that. One final question. It's a challenging time, I would say. We have a major election coming up. We have higher interest rates, waiting to see what the Fed will do in the upcoming meetings. But what— how are you navigating that? What are you looking for in terms of opportunity specifically right now?
Well, it's very interesting. I would say all over the world, it's not really in the public domain or in the public view. But I would say that most major family offices are stockpiling two things: some Bitcoin because the prices are low and gold. So there are massive number of trades actually going on with, ironically, one of the oldest assets in the world, which is gold and Bitcoin, because there's a feeling that, you know, there's a big amount of change in the regime change, not only in the United States but everywhere globally. So there's a tremendous amount of looking at hard assets At the same time, artificial intelligence, Bitcoin, all these new things coming online. So, so I think while it's insecure, gold is going to suddenly come back on people's radar in a way I haven't seen in years. Countries as well as regions of the, you know, of big countries like China, big regional governments buying gold, governments in the UAE buying gold, and then families in the United States as well. So that's been kind of interesting and unexpected. How much old-school gold has come back on the table. But I would say in addition to that, obviously anything to do with artificial intelligence, any real practical and not terribly expensive application is moving forward. I would say, for example, in Europe, the Carbon Border Adjustment Mechanism, or CBAM, is coming online in the next 2 years. That means that the carbon credit markets are going to become this entirely new asset class. And it is happening whether people like it or not. So you're seeing a lot of people looking into new technologies that will help capture carbon for, you know, gas flares, capping oil wells, enriching agricultural soil. So in the rest of the world, those topics are very hot. Climate tech, fintech, artificial intelligence, but ironically also gold, diamonds, and gemstones. So it's a strange time. Yes, exactly.
Well, we appreciate this so much, Carol. Thanks for taking the time to talk with us. Really appreciate it.
